We have made final rules to change how the FSCS is funded and are consulting on changes to our Professional Indemnity Insurance (PII) requirements for Personal Investment Firms (PIFs).
This consultation paper follows CP17/36 (PDF) published in October 2017 which consulted on proposals for reforming FSCS funding. Our review seeks to ensure the FSCS continues to provide the right protections, works effectively and is funded fairly. Following the feedback received we have now made final rules (to take effect in April 2019), as follows:
- merging the Life and Pensions and Investment Intermediation funding classes
- requiring product providers to contribute around 25% of the compensation costs which fall to the intermediation classes
- moving pure protection intermediation from the Life and Pensions funding class to the General Insurance Distribution class
We have also made rules to increase the FSCS compensation limit for investment provision, investment intermediation, home finance and debt management claims to £85,000, also from April 2019.
We are also consulting on draft rules to ensure that PIFs should have PII policies that do not limit claims, where the policyholder or a third party is insolvent, or where a person other than the PIF (eg the FSCS) is entitled to make a claim. The changes are intended to ensure that more consumer claims are paid by insurers which could help to reduce the cost of the FSCS to other firms.
Who this applies to
This consultation paper will be of interest to all firms, whether they are current or potential contributors to FSCS funding, and to consumers, or consumer groups. It will be of particular interest to PIFs and to insurers and brokers active in the PII market for PIFs.
This consultation has now closed. In November 2018, we published final rules in Handbook Notice 60.
15/04/2019: Information changed Updated to note closed consultation and final rules in Handbook Notice 60